A Base Case Scenario is a hypothetical situation that defines the parameters of a business decision by accounting for expected outcomes and factors. It’s like a “worst-case scenario” plan — it assumes that every risk and every negative outcome will occur. Businesses use base case scenarios as a tool to assess the profitability and/or risk of a given action. By considering the potential risks and rewards associated with a course of action, businesses can make informed decisions and weigh the benefits of taking certain risks. Base case scenarios are an important part of understanding the overall context in which a decision should be made, enabling businesses to make more informed decisions.